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New regulation of issuing Chinese VAT invoice comes to effect

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on Friday, 04 August 2017
in Business in China

On May 19th, 2017, the China State Administration of Taxation (SAT) published an announcement titled, “Announcement of Matters Regarding the Issuance of Value-added Tax Invoices”.

In this announcement, it states that “from July 1 2017, a corporate purchaser needs to provide a Tax ID when obtaining a general VAT fapiao from a seller. The Tax ID should be on the VAT fapiao. If not, the VAT fapiao will not be seen as a valid tax payment receipt.” This means that corporations should exercise caution when they need issuing VAT fapiao since it appears that the SAT will monitor every corporation’s tax status.

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New Chinese “Green Card”

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on Wednesday, 05 July 2017
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In parallel with its newly implemented work permit system that categorizes foreign employees into 3 classes, China is reforming its permanent residence cards (Green Cards) to ease foreign experts’ lives in China.

The "Foreigner's Permanent Residence Card" will be renamed as the "Foreigner's Permanent Residence Identity Card." Just like the Chinese Identity Cards. The new ID cards will have a chip embedded that will ease the access to several social services in China, such as purchasing train and air tickets, bank transactions and hotel check-ins, etc.

Chinese “Green Card” is generally considered one of the hardest to obtain. Since 2004, when the government introduced this, only around 7,000 green cards have been issued. However, within the previous year the number of card holders has increased dramatically. “In 2016, 1,576 foreigners became new permanent residents of China. That's up 163% from the previous year, according to China's Ministry of Public Security.”

Keep in mind that not every foreign who resides in China is eligible for this card. Applicants must be in a specific tier based upon the visa class ranking system that has recently been implemented by Chinese authorities. This ranking system is based upon expert skills and attributes that they bring to the Chinese labor market. Some recent green card holders include high level business and technology executives, in addition to individuals who have out-performed expectations and brought value to China and Chinese companies.

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China’s Tax Offenders Blacklist System in a nutshell

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on Wednesday, 05 July 2017
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In 2016, the Blacklist system was introduced and implemented as a way of promoting “best practices” for tax recording and reporting among all business activities based in China. The relevant authorities now have the ability to enforce the 18 new disciplinary measures against any business that deem in violation of tax regulations. These new measures include: the restriction of access to governmental funds, the barring of companies leaving China, and the enforced disclosure of relevant information via the National Enterprise Credit Information Publicity System. Additionally, several other penalizing regulations are as follows:[1]

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HR Event Held at Daydayup Beijing

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on Wednesday, 05 July 2017
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May was a busy month for the staff at PTL. In the middle of the month, PTL’s China General Manager, Arie Schreier and Deputy General Manager Shahaf Nave traveled up to Beijing to conduct an HR seminar held by PTL at DayDayUp (DDU), a co-working space. Two of PTL’s clients are internet companies and they are hosted at DayDayUp with the HR and Admin support from PTL Beijing office. We realize that most newly founded companies found recruitment and HR management quite daunting and the rules are very different from the West. Therefore PTL held this seminar to share our knowledge and experience in HR with Daydayup members and the other newly started companies in Beijing.

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Supply Chain Management is Not Merely Managing Import and Export

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on Thursday, 09 March 2017
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Interview with PTL Group Logistic Manager—Chris Pan

Chris Pan has over 12-year operating experience at PTL Group. Chris leads the team delivering profitable integrated supply chain management solutions to bridge overseas clients’ penetration into China and assisting to build solid company reputation across diverse industries, ranging from medical equipment, electronics, security, chemical to agriculture machinery, water treatment industries. 

Q: You use the term “Fourth Party Logistics Provider” very often, would you please elaborate the meaning of the term and how it differentiates from “Third Party Logistics Provider”?

A: The concept of a Fourth-Party Logistics (4PL) Provider is an integrator that manages the resources, capabilities, and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions. Whereas a third party logistics (3PL) service provider targets at a function, 4PL targets at management of the entire process. A Fourth-party logistics provider can also be considered a consulting firm specialized in logistics, transportation, and supply chain management. In another word, the 4PL stands on a higher level and plays an important role in managing the client’s entire supply chain.

Take PTL Group as an example, as a 4PL provider we look after the whole process of our clients’ entire supply chain ranging from the sales forecast, cash flow planning at the HQ, importation/exportation, safety storage and distribution, etc. Our customized solution can help HQ make better plan and therefore implement HQ’s strategy with operational optimization.

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Brief Guide to the Latest Import Duty Regulations in China

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on Wednesday, 08 March 2017
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In 2016, there were several changes in import duty regulations. Goods that are imported into the Chinese territory may be subjected to three types of taxes and duties: value-added tax, consumption tax and customs duty.

Taxpayers of the three types of taxes and duties include all enterprises, units, household businesses and other individuals engaged in production or importation of taxable consumer goods within the territory of the People’s Republic of China.

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China’s Polluted Air is an Opportunity for Foreign Technology

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on Wednesday, 08 March 2017
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The Chinese are finding it hard to breathe. According to the WHO, the proper air quality level for daily living is no more than 25 micrograms of pollution particles per meter cubed of air. During the first days of 2017 in Beijing, the concentration of pollution particles in the air passed 500 micrograms, over 20 times the limit!

Under these conditions, PTL Group, as a company that provides shared offices in China and offers services including business and operational support for foreign companies, strictly maintain air quality and their offices are equipped with all required air filtration equipment, as well as a measuring device which shows the air quality at all times.  The company, managed by Arie Schreier, was awarded first place in a competition held by gem in Shanghai, which tested the air quality in a large number of co-working spaces in the city. The competition tested the air quality using three parameters: 2.5PM (concentration of small particles that pass through the respiratory system), amount of carbon in the air and amount of VOCs.  

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China has restricted its overseas transaction regulations

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on Wednesday, 08 March 2017
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Since the beginning of 2015 the value of the yuan against the dollar has weakened, devaluating more than 6% in 2016. Meanwhile, a large amount of capital left China, which led Bloomberg to 

estimate that China has suffered more than $1.7 trillion in capital outflow since 2015. A big percentage of this outflowing capital was used for overseas real estate investment by individuals and groups, some of which also involved money laundering. To slow down this outflow and combat money laundering the State Administration of Foreign Exchange (SAFE) is introducing restrictive measures that will be implemented from July 1 2017. After the implementation of the new measures, individuals are still allowed to transfer up to 50,000 USD yearly overseas, however the money transferred is not allowed to be used for real estate investment purposes, only for medical or travel services. If individuals want to transfer a higher amount they have to disclose their reasons and wait for regulators to evaluate their case. In addition to this, financial institutions will have to document all transactions, and since January 1 2017, the Bank of Shanghai and China Merchants Bank are required to have their customers complete a form if they want to exchange RMB to foreign currencies through mobile bank apps.

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New Regulations for Third-Party Payment Services

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on Wednesday, 08 March 2017
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The past few years have shown that payment through third-party services has become more and more popular among the Chinese population, and this popularity is only set to increase. Today many shops, retailers and restaurants accept third-party mobile payments such as Ant Financials’ Alipay or Tencent Holding’s WeChat Pay. On one hand it is convenient for customers to use third-party payment, but on the other hand it has a higher risk of money laundering and there is less transparency with these companies.

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2017 Chinese/Jewish Holidays Calendar

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on Tuesday, 13 December 2016
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China's New Transfer Pricing Rules

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on Friday, 02 December 2016
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Written by Zachi Lichtblau at Bonnard Lawson International Law Firm

On the 13th of July 2016 China's State Administration of Taxation (‘SAT’) released Bulletin 42 that contains the new transfer pricing documentation rules. Since it will have a far-reaching impact on taxpayers, it is of great importance to be aware of the content and effects of these (partly) new rules. In principle, all multinational companies engaged in cross-border, related-party transaction can expect to be significantly affected by the transfer pricing documentation requirements in Bulletin 42. An exception has been made for multinational companies that are engaged in purely domestic related-party transactions.

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HR Management Can Be Tricky in China

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on Wednesday, 23 November 2016
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Interview with PTL Group HR & Admin Manager--Jasper Zhang

Jasper Zhang, a professional HR and Admin expert, joined PTL Group in 2011. Jasper has intensive experience in recruitment, HR management, payroll, KPI evaluation and various admin and mass layoff projects.

Q: What do newcomers and foreign companies coming to China need to learn before they start to hire employees here?

A: I think that there are two things foreign companies need to learn before they start to recruit their local employees: the Chinese Labor Contract Law and the C&B (Compensation & Benefit) system. For the C&B system in China, foreign employers should keep in mind that, conventionally, Chinese employees will always ask for something more than gross salary, e.g. a transportation allowance. So when checking with a Chinese candidate what their current income is remember to also ask about the salary package on top of the gross salary. In addition, you also need to understand the social benefits and housing system in China. By doing so, you will understand the total employer cost to you to hire this candidate.

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Termination Terms under the Chinese Labor Contract Law

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on Wednesday, 23 November 2016
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There are several forms needed to end a labor contract in China and each one of them has its own set of terms and rules; how the employer can end the contact, how the employee may quit, and how the severance payment should be calculated. These are some of the issues we have included in this brief guide to help you assess the termination terms in Chinese employment contracts.

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WFOE SET-UP IN CHINA

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on Wednesday, 23 November 2016
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CHANGES IN REGULATION

Doing business in China is becoming easier and more appealing for foreign companies now that the WFOE set-up process has been simplified.

In early September a new set of rules were released to ease the burden on the business environment within China by reducing bureaucracy and increasing transparency. The rules specifically support Foreign Invested Enterprises (FIEs) and took effect from October 1st 2016. Among the amendments in the law, it was decreed that Ministry of Commerce (MOFCOM) approval will no longer be required; instead only online filing will be needed. However it is important to note that this will only apply to those businesses not listed on the negative list.

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Cybersecurity Law in China

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on Wednesday, 23 November 2016
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In July 2015 the National People’s Congress (NPC) proposed the first draft of a so called Cybersecurity Law. This year, on November 7th the law was submitted and takes effect in June 2017. Many global companies, especially those operating in the technology sector, are concerned about the passing of this law because they believe it will limit their operational powers within China. One reason, certain business operators say, is that with this law coming into force, the Chinese government would have greater powers to monitor and block any online content they perceive to be a threat. In addition to this, those concerned about the law are worried about the government, as well as various other parties, gaining more insight into foreign business’s data. The reason is that the new law requires companies to give the government investigators full access to their data if wrong-doing is suspected.

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Which class do you belong to?

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on Wednesday, 23 November 2016
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China is testing a new work permit system that ranks foreigners

On November 1st of 2016, the Chinese government introduced a new work permit system that categorizes foreigners into “classes”. Under this system the “Alien Employment Permit” and “Foreign Expert Certificate” are combined to create a “Foreigner`s Work Permit” (FWP), which looks a lot like the Chinese ID card. The work permit will display an identification number, a photo and the name of the individual effectively replacing the passport for tasks such as purchasing train tickets. The FWP is currently being tested in nine cities or provinces, including Beijing, Tianjin and Shanghai with the plan being to roll out the new work permit policy nationwide by April 2017.

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Hiring foreigners in Shanghai has become easier

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on Thursday, 29 September 2016
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From November 1, foreigners will only have to apply for a unified work permit as the two types of work permits for ordinary foreign employees and foreign experts will be streamlined into one.  The pilot scheme of unified work permit for expatriates is launched in nine provinces and cities, including Shanghai. The trial ends next April.

The application process will also be simplified, which means some materials will no longer be needed, such as a personal resume.

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How can you benefit from the VAT reform in China?

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on Friday, 23 September 2016
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China has been paving their way to a fiscal reform that will help them achieve the economic and social goals set in previous years. China’s first step towards their fiscal transformation was the VAT reform that was implemented in Shanghai in 2012. This initiative was expanded to pilot sectors across the country on August 1st 2012 due to its remarkable success and its bolster the slowing economic growth. On May 1st 2016 the reform was officially implemented throughout all China. The reform program seeks to replace business tax with a value-added tax to avoid duplicated taxation and to lower the tax burden.

The trial program launched in 2012 was originally applied to service sectors, telecommunications, and postal services among others. Now, taxes in construction, property and finance are also bound to the tax initiative. The manufacturing industry, which already operated under a VAT structure, will benefit from this reform as they will obtain tax breaks on research and development to incentivize innovation.

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Do You Need an Operational Audit for Your Chinese Office?

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on Friday, 23 September 2016
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When would you need to conduct an operation audit?

When we meet managers from international companies’ headquarters they often tell us their concerns about their Chinese activities: after a few years they have the feeling that the situation is not under their control anymore, or at least they feel they don’t know the details of what’s happening in their Chinese office.

Other times, we meet companies that, after spending some time in China, have the need to grow or downsize their local activities.

Whichever might be the case, this is the right time to assess your business so you can gain back full control of your Chinese branch, or understand how to better proceed with changes you’d like to make in your business. This is the right time to conduct an operational audit.

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Finance Management is Critical in Operating Your Business in China

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on Monday, 29 August 2016
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Interview with PTL Group CFO--Shirley Xia

Shirley Xia has over 10 years of experience as a financial controller and manager. She has successively worked in large state-owned manufacturing, trading, software and international freight companies, with extensive experience in financial management and tax planning. Joined PTL Group in June 2010, Shirley has overseen many projects in business auditing, WFOE set-up and operation and tax planning, etc.  

Q: Among the Auditing and Business Recovery projects you have carried out, which project did you manage to deliver satisfactory results for despite its challenging nature?  

A: My first project at PTL was to manage a turn-around project for an Italian manufacturing company. The company suffered from very tight cash flow and had many management issues. The company’s headquarter was hesitating whether to continue operating in China after having done so for several years yet without healthy revenue.  They asked the PTL team to audit and screen the company’s entire financial and HR situation, as well as the logistics and manufacturing work flows.

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